Covid update

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With help from Aaron Lorenzo and Doug Palmer

Editor’s Note: Weekly Tax is a weekly version of POLITICO Pro’s daily tax policy newsletter, Morning Tax. POLITICO Pro is a policy intelligence platform that combines the news you need with tools you can use to take action on the day’s biggest stories. Act on the news with POLITICO Pro.

WHERE THINGS STAND WITH COVID: House Speaker Nancy Pelosi and Mark Meadows, the White House chief of staff, were among the guests circulating around the Sunday shows — and let’s just say they left an impression that there’s still a lot of work left to get a bill done, with just eight days left until the election.

So if it’s becoming more likely that any deal won’t come until after Nov. 3, do we have any sense of what might be in that agreement, especially on the tax side? Well, Democrats have been dropping some clues about what they’d like to do if they wield significant influence over future relief. (Caveat, of course, that those election results will play a big role in shaping any measure.)

House Democrats made proposals on business tax provisions to Republicans last week that floated around K Street and the Hill, some of which shouldn’t be that surprising — like seeking the expansion of the employee retention tax credit that the House passed in May. (Roll Call’s Paul Krawzak and Doug Sword first reported on the document, including how Democrats are proposing to limit a bipartisan Senate remote worker measure.)

The big question in that document: Democrats are saying they want to “reserve discussion” on rolling back provisions from March’s CARES Act that gave both corporations and pass-through businesses more leeway to spread around their losses for tax purposes.

Democrats have targeted those provisions for months now, and the further revelations in The New York Times that President Donald Trump used net operating losses to lower his tax bills certainly didn’t lessen their interest. On the flip side, K Street types have been saying that spiking the more generous loss provisions would be a poison pill for Republicans.

So what to take from Democrats wanting to save that fight for another day? There seem to be two real possibilities. First, they’re really serious, and the business community will be in for a big fight in the coming months if Democrats win full control early next month.

Or: It’s all part of the give-and-take of the negotiations, especially so close to the election, and Democrats won’t be drawing any lines in the sand over NOLs. (Remember those kinds of provisions have gotten bipartisan support in the past.)

And of course: Democrats won’t be limiting their tax proposals to the business side — they’ve already signaled that expansions of refundable tax incentives like the Child Tax Credit and the Earned Income Tax Credits will be of high importance.

WELCOME TO WEEKLY TAX, your second-to-last before next month’s election. Halloween is also just around the corner, so procure your own murder hornet protection suit as soon as you can.

Why, yes this topic did come up in last week’s debate: Today marks 71 years since then-President Harry Truman signed an update to the Fair Labor Standards Act that narrowed that law’s scope while also raising the minimum wage from 40 cents per hour to 75 cents an hour. (Offered without further comment: 40 cents in 1949 dollars is $4.37 today, while 75 cents is $8.20.)

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WHO SAYS BIPARTISANSHIP IS DEAD? A little scoop here, via Pro Tax’s Aaron Lorenzo — House Ways and Means Chairman Richard Neal (D-Mass.) and Rep. Kevin Brady of Texas, the panel’s top Republican, could introduce a new retirement security measure as soon as Tuesday.

No word yet on the actual content of that measure, though a spokesperson for Ways and Means Democrats said they were hoping to roll out the proposal as soon as this week. Interest groups called the coming measure “SECURE 2.0,” after the 2019 bill that had broad bipartisan support but got hung up for months because of a partisan spat over whether to include language that expanded tax advantaged 529 accounts for education expenses.

Hard to know next steps after that, but it’s also fair to point out that the progressives who aren’t huge on Neal weren’t totally sold on SECURE 1.0 either.

KILL THE “KILL SWITCH”: North American business groups are prodding Mexico’s Congress to reject a proposal that would shut down internet services provided by foreign companies if they fail to comply with a new registration requirement under Mexican tax law.

“This provision is inconsistent with Mexican law and trade obligations, would have a negative impact on the Mexican economy, and is unnecessary to ensure tax compliance,” the U.S. Chamber of Commerce and aligned groups from the U.S., Canada and Mexicosaid in a letter on Friday to Mexican congressional leaders.

The Mexican government proposed the so-called internet “kill switch” as part of its 2021 budget, which is currently before Congress. The business groups said they “envision that there will be a significant number of blockages resulting from this provision,” especially among “non-resident service providers that do not charge for their service, and charged that it appeared to violate several of Mexico’s commitments under the USMCA.

Around the World

KEEP IT OPEN! Real estate investors in Denmark are furiously trying to convince the government to stay away from a legal loophole that gives them big tax breaks, Bloomberg reports. Lawyers for the industry say the proposal to get rid of the tax advantage, which still has to pass parliament, largely is targeted at foreign investors. The Social Democrats who run the government say the current set-up allows those foreign investors to delay tax payments for far too long. Here’s how the tax break works: Lots of properties sold in Denmark aren’t technically sold. Instead, the deals are structured so that the holding company behind the property is sold, which allows for the long-term deferral of the tax on property gains.

Around the Nation

MORE, STILL? Louisiana hasn’t been shy about handing out tax breaks to manufacturers over the years, and the state will now be asking voters next week whether to hand out more, The Advocate reports. The proposed Constitutional Amendment 5 would let local governments make their own property tax arrangements with manufacturers — allowing, for instance, upfront payments in exchange for tax breaks in the long run. But here’s the twist: Supporters of the proposed amendment argue it’s a way to help localities that have been hurt by a current state program that already offers big tax breaks to manufacturers. That initiative, the Industrial Tax Exemption Program, gives manufacturing companies large property tax abatements for up to a decade. The amendment would then allow localities to get back some of that lost revenue, but the amendment’s language suggests they could be forgoing other revenue streams for as much as a quarter-century.

Quick Links

The NYT goes deep on Trump’s longstanding love of the conservation easement.

Meanwhile, WaPo digs in on syndicated conservation easements.

Fidelity Charitable, wealthy investors involved in federal court showdown.

The Hill: “Businesses, wealthy brace for Biden tax hikes.”

Whatever you do! The beer, grocery and hospitality sectors urge Washington state officials not to raise taxes on beer.

Deadline stays: Oregon home owners won’t get a break on a Nov. 16 property tax due date.

Did You Know?

Jimmy Carter was the author of the first novel ever written by a U.S. president, titled “The Hornet’s Nest.”